Investor financing

DSCR loans for investment property

DSCR financing qualifies the property rather than you. The rent the property brings in is measured against what it costs to carry, and that ratio is what the lender underwrites. DSCR programs generally do not require personal tax returns or W-2 income qualification, and qualification is based primarily on the property's cash flow rather than personal DTI.

The ratio

How it is calculated

Gross monthly rent, divided by the total monthly cost of the property.

That total includes principal, interest, taxes, insurance, and association dues. Flood insurance counts where the property requires it. The DSCR calculator works all of that out for a specific property.

1.25 and upStrong coverage.
1.00 to 1.25The property covers itself.
Below 1.00Options still exist. They are narrower, and the file needs more care.
Who it fits

Find your situation

Your returns do not show what you earn

Depreciation and write-downs are good tax planning and bad mortgage applications. A DSCR loan does not look at them.

You have hit the conventional limit

Conventional financing limits how many properties you can have financed at once. DSCR programs are underwritten differently, and that limit is usually not the obstacle.

You are taking title in an LLC

Most conventional financing will not lend to an entity at all. Entity-titled purchases and refinances are ones I actually do.

You want your equity back out

Cash-out refinancing on a property you already own, so you can redeploy it into the next one.

What I can do with it

The kinds of files I take

Worth knowing

Lenders do not all calculate this the same way

Some programs use market rent from the appraisal rather than the signed lease. Some treat reserves or required insurance differently. Two lenders can look at the same property and reach different numbers, which is the argument for sending me the scenario before you write an offer. I will tell you where it prices best.